Franklin corporation has a current stock price of 23 per, Ask an Expert

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Franklin Corporation has a current stock price of $23 per share and paid a dividend last year of $2.00; and, it expects that dividends, earnings and stock price to grow at the rate of 7%. In addition, Franklin has a Beta of 1.6, the expected return on the market is 13.2% and the risk free rate is 8%.

a. What is the estimated required return "r" using the dividend constant growth approach?

b. What is the estimated required return "r" using the CAPM approach?

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Category:- Basic Finance
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